Reinventing real estate, Part 2

Written by Charles Warnock


Reinventing real estate (Part 2:

How online and empowered consumers are taking charge and paying less.

Demanding consumers

“Internet buyers tend to be better informed on market conditions and better prepared to act onrepparttar home they want when they start working with a realtor. Luckily for realtors, these changes don’t necessarily hurt, as long as they are able to adjust torepparttar 135335 new relationship and realize thatrepparttar 135336 new-style buyers value speed and efficiency over guidance when finding a home.”

– E-marketer, Internet Home Buyers Changingrepparttar 135337 House Rules

Thanks torepparttar 135338 Internet and other technological innovations, more real estate information is freely available than ever before. As a result, consumers are demanding new choices, improved services, faster transactions and lower prices. According to a recent NAR survey,repparttar 135339 number of sellers stating that they didn’t want to pay a sales commission fee rose from 46 percent in 2003 to 61 percent in 2004. In 2004, 23 percent of Florida home sellers opted to sell independently without an agent, up from 14 percent in 2003 and nearly doublerepparttar 135340 14 percent national average, according to Planet Realtor.

And Web-enabled consumers are demanding a high digital IQ when working with real estate professionals. In addition to being well-versed on their own industry-specific technology, real estate professionals now are expected to utilize laptops, mobile phones, digital cameras, personal digital assistants and global positioning systems to keep pace with Internet buyers and sellers. Downward pressure

“If consumers are going to do their own home-shopping online, they expect to save some money, just as they would for usingrepparttar 135341 self-service lane. That's why they are susceptible to online discount brokers andrepparttar 135342 new affinity companies that are promoting lower commissions if onlyrepparttar 135343 consumers will use their agents. These business models promoterepparttar 135344 idea to consumers that they ought to be paying less money in commissions.”

Realty Times Columnist Blanche Evans

Traditional real estate commissions, typically around six percent of a home’s selling price, are facing downward pressure from consumers and competition. Some consumers claim traditional real estate commissions don’t reflect:

Today’s home prices. Years ago, when median-priced homes sold for $25,000, real estate commissions were typically five percent, or $1,250. Today, with South Florida median home prices around $300,000,repparttar 135345 cost of a six percent full-service real estate commission becomes $18,000. Some brokers even charge additional fees to cover administrative costs. When you consider that today’s average homeowner sells a home every five to seven years, real estate commissions can dramatically impact your personal savings and net worth.

Owner equity. When selling properties, most homeowners calculaterepparttar 135346 cost of selling as a portion of sales price, thoughrepparttar 135347 commissions are paid out of owner equity. (Equity isrepparttar 135348 difference betweenrepparttar 135349 value of your property and amount of mortgages owed.) Consider this example: You decide to sell a property for $250,000 in which you hold 10 percent equity, or $25,000. After paying a six percent commission of $15,000, you are left with $10,000 before any applicable closing costs. In this example,repparttar 135350 $15,000 commission is six percent ofrepparttar 135351 selling price, but 60 percent ofrepparttar 135352 $25,000 equity.

Services performed. Under today’s commission structure, selling a $100,000 house at six percent typically costs $6,000, while selling a $500,000 house costs $30,000. Does sellingrepparttar 135353 more expensive home really require five times more effort? Your cost isrepparttar 135354 same whetherrepparttar 135355 agent spends one hour or 100 hours marketing your home. This is one reason many real estate consumers find fee-for-service real estate so appealing. Developing alternatives

“Consumers want what they want, when they want it and will gravitate torepparttar 135356 most cost-effective source to obtain it. Why? Because our "one-size-fits-all" approach to working with sellers and buyers is archaic and won't allow consumers to access various segments of help they need in a timely fashion. That's why .com Web start-ups are finding a receptive audience in real estate consumers and why for-sale-by-owners are burgeoning.”

Julie Garton-Good, Author of “Real Estate a la Carte: Selectingrepparttar 135357 Services You Need, Paying What They’re Worth”

Until recently, you have had few practical alternatives torepparttar 135358 traditional full-service, full-commission real estate transaction with a broker. Most sellers paid a single commission fee for a full range of real estate services, whether they needed them or not. Now traditional real estate agencies facerepparttar 135359 challenge of identifying new services that have value to today’s sophisticated online and empowered consumers.

The Art & Science of Property Valuation

Written by Manuel Iraola & Charles Warnock


The Art & Science of Property Valuation

It is no secret that sellers want to sell high and buyers want to buy low. But they often arrive atrepparttar negotiating table with very different ideas on price. A fair and objective property valuation can help buyers and sellers find common ground and streamlinerepparttar 135334 negotiation process.

Inrepparttar 135335 end,repparttar 135336 property is worth what a buyer is willing to pay. But to help both buyers and sellers achieve their goals, both should have a fair and objective estimate of property value. Unfortunately, even objective estimates are still estimates, and there is no way to assure 100% accuracy:

* Appraisals performed by a certified appraiser are not 100 percent accurate. * CMA’s (Comparable Market Analysis) and BPOs (Broker Price Opinions) performed by a licensed broker or agent are not 100 percent accurate. * AVM (Automated Valuation Model) technology is not 100 percent accurate.

All these methods, when properly executed, can provide a good indication of value. Estimating value is a combination of art and science. Regardless of how scientificrepparttar 135337 approach,repparttar 135338 actual sale price is subject torepparttar 135339 unique variables of each property transaction: property condition, upgrades, current market conditions, circumstances ofrepparttar 135340 sale and individual tastes.

For property owners, pricing correctly is a key to a successful sale. Under-pricing can result in a fast sale, but carriesrepparttar 135341 risk of leaving money onrepparttar 135342 table. Sellers who price too high may find their properties lingering onrepparttar 135343 market, and statistics show that values can erode at a rate of about 1.5 percent per month. Longer sales also increaserepparttar 135344 likelihood of a “distressed sale” when sellers become frustrated or encounter difficult financial circumstances.

Likewise, buyers should avoid emotional purchases. Overpaying because of "falling in love” with a home is common. Homekeys' ValueKey Technology can help establish an objective, unemotional baseline for buyers and sellers so distressed sales and emotional purchases becomerepparttar 135345 exception, notrepparttar 135346 rule.

The science of AVMs

To determine a good baseline value for a property, use Homekeys to search thousands of property records for comparable sales or “comps.” Homekeys' ValueKey tool uses advanced statistical models and proprietary algorithms and formulas to findrepparttar 135347 best comparable properties available. In addition to property characteristics,repparttar 135348 system evaluates how recent comparable sales are and how close properties are fromrepparttar 135349 property being evaluated. Once a base property value estimate is determined, it’s time to check active listings to see what similar properties are selling for. ValueKey searches both owner- and broker-offered active listings to findrepparttar 135350 most comparable properties available.

Cont'd on page 2 ==>
 
ImproveHomeLife.com © 2005
Terms of Use